Estate of Gardner v. Continental Cas. Co., 2016 U.S. Dist. LEXIS 26555 (D. Conn. Mar. 1, 2016):

RULING ON MOTION [*2]  FOR CLASS CERTIFICATION

Plaintiffs the Estate of Marie L. Gardner, the Estate of Francis R. Coughlin, M.D., the Estate of Barbara B. Coughlin, Janice B. Foster, and Marie Miller bring this case against Defendant Continental Casualty Company ("CNA"), alleging violations of the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110a (Count One), unjust enrichment (Count Two), breach of contract (Count Three), and bad faith (Count Four), arising from Defendant's denial of insurance claims for Plaintiffs' stays in assisted living facilities in Connecticut. Plaintiffs now move [Doc. ## 108, 109] for class certification. Oral argument was held on February 24, 2016. For the following reasons, Plaintiffs' motion is granted.

Plaintiffs propose a Rule 23(b)(2) class and a Rule 23(b)(3) subclass. As revised at oral argument, Plaintiffs' proposed Rule 23(b)(2) class consists of all current CNA long-term care insurance policyholders of the following policy forms -- 'LTC 1' (Forms 15203/16356/17931) and 'Con Care B' (Form 59433) who reside in Connecticut and whose policy was issued in Connecticut. The proposed Rule 23(b)(3) subclass consists of:

   All Class members who were medically eligible for benefits but were not afforded coverage for a stay at an assisted-living [*3]  facility¹ in the State of Connecticut -- on the grounds that the facility (1) was not licensed by the state and/or (2) could not legally provide 24-hour-a-day, or continuous, nursing services/care and who suffered ascertainable damages as a result.

(Mot. for Class Cert. at 2.)

In order to understand these class definitions, some background on the insurance policies at issue and the Connecticut laws and regulations governing assisted living facilities is necessary.

I. Background

A. Connecticut Laws & Regulations

Plaintiffs' claims arise out of Defendant's refusal to cover their stays in managed residential communities ("MRCs") in Connecticut or to cover the services provided to Plaintiffs through assisted living services agencies ("ALSAs").

Under Connecticut law, an MRC is a "for-profit or not-for-profit facility consisting of private residential [*4]  units that provides a managed group living environment consisting of housing and services for persons who are primarily fifty-five years of age or older." Conn. Gen. Stat. § 19a-693. MRCs must "[a]fford residents the ability to access services provided by an [ALSA]." Conn. Gen. Stat. § 19a-694. ALSAs are regulated by the Connecticut Department of Public Health.

Under the Department's regulations, an MRC "may not provide health services . . . unless it has been licensed as an assisted living services agency." Conn. Agencies Regs. § 19-3-D105(c)(6). An MRC may, however, "contract with one or more" ALSAs "to make available health services for tenants provided by such licensed persons or entities." Id. "Assisted living services may not be provided in a managed residential community unless . . . the assisted living services agency has been issued a license to operate by the department." Id. § 19-3-D105(c)(1).

ALSAs are required to employ a supervisor of assisted living services who must he "a registered nurse licensed to practice in this state," id. § 19-3-D105(g)(1), as well as at least one additional registered nurse, id. § 19-3-D105(j)(2). Supervisors must be on site at least twenty hours per week (forty if the ALSA employs more than ten full time or full time equivalent licensed nurses or assisted living aides). Id. § 19-3-D105(j)(3). Additionally, [*5]  ALSAs are required to be staffed with other "licensed nurses at least ten . . . hours per week for each additional ten . . . or less full time or full time equivalent assisted living aides." Id. § 19-3-D105(j)(4). Finally, ALSAs must "designate a registered nurse to be on call twenty-four . . . hours a day." Id. § 19-3-D105(j)(8).

ALSAs are mandated to "maintain a complete service record for each client. All parts of the record pertinent to the daily care and treatment of the client shall be located in an accessible area on the campus of the managed residential community." Id. § 19-3-D105(k)(1). The record must contain "complete medical diagnoses," "all initial and subsequent orders by the physician or health care practitioner," "assessment of the client including pertinent past and current health history, physical, mental and social status, and evaluation of client's needs," "nurses['] notes including changes in client conditions," "a record of medications administered," and "documentation of all care and services rendered." Id. § 19-3-D105(k)(2).

***

1. Ascertainability

The Second Circuit has "recognized an implied requirement of ascertainability in Rule 23." Brecher v. Republic of Argentina, 806 F.3d 22, 24 (2d Cir. 2015) (internal quotation marks omitted). "A class is ascertainable when defined by objective criteria that are administratively feasible and when identifying its members would not require a mini-hearing on the merits of each case." Id. at 24-25 (internal quotation marks omitted).

a. The Rule 23(b)(2) Class

Defendant maintains that Plaintiffs' main class of all current LTC 1 and Con Care B policyholders is "impermissibly overbroad" because it "includes policyholders who have [*24]  not made, and never will make, an MRC [managed residential community] claim" and "policyholders who may have bought and then cancelled a policy without ever hearing of an MRC." (Opp'n Mot. for Class Cert. [Doc. ## 126, 127] at 26.) As a result, " [t]he proposed main class does not have just some members without standing--the vast majority lack standing." (Id. at 26-27.)

"The Second Circuit has cautioned against certifying overbroad classes, even under Rule 23(b)(2), which requires a less precise definition than Rule 23(b)(3)," M.G. v. New York City Dep't of Educ., No. 13-CV-4639 (SAS), 2016 WL 54687, at *8 (S.D.N.Y. Jan. 4, 2016), noting that "an over-broad framing of the class may be so unfair to the absent members as to approach, if not amount to, deprivation of due process," Haitian Centers Council, Inc. v. McNary, 969 F.2d 1326, 1337 (2d Cir. 1992) cert. granted, judgment vacated sub nom. Sale v. Haitian Centers Council, Inc., 509 U.S. 918 (1993). Relatedly, the Second Circuit, while not "requir[ing] that each member of a class submit evidence of personal standing,"¹⁰ has admonished district courts not to certify any class "that contains members lacking Article III standing."¹¹ Denney v. Deutche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006). Thus, "[t]he class must . . . be defined in such a way that anyone within it would have standing." Id.

10   "To have Article III standing, a plaintiff must satisfactorily allege: (1) a concrete, particularized, and 'actual or imminent' injury; (2) 'a causal connection between the injury and the conduct complained of and (3) a likel[ihood] . . . that [*25]  the injury will be redressed by a favorable decision' of the court." Janes v. Triborough Bridge & Tunnel Auth., 889 F. Supp. 2d 264, 465 (S.D.N.Y. 2012) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). "Where, as here, a plaintiff seeks injunctive relief, that plaintiff must adequately allege that he or she is presently 'under threat of suffering injury in fact that is concrete and particularized; the threat must be actual and imminent, not conjectural or hypothetical; it must be fairly traceable to the challenged action of the defendant; and it must be likely that a favorable judicial decision will prevent or redress the injury.'" Id. at 465-66 (quoting Summers v. Earth Island Institute, 555 U.S. 488, 493 (2009)).

11   Whether all class members or only class representatives must have standing is the subject of a circuit split.

That is the case here. Every current policyholder purchased long-term care insurance with the expectation that at some point in the future she would need to utilize it. She may not know exactly when she will need the insurance, but she can be fairly certain that at some point she will need it, and when she does, she will be faced with a policy interpretation that severely limits her options for long-term care.¹² These individuals, therefore, have standing to challenge Defendant's interpretation of their policies. Plaintiffs' revisions to the class definition--limiting [*26]  it to current policyholders rather than former and current, and limiting it to Connecticut residents who purchased their policies in Connecticut--eliminate any problems of overbreadth that might otherwise have existed.

12   Defendant asserted at oral argument that Plaintiffs could not have had an expectation that their policies would cover MRC/ALSAs [assisted living services agencies] when they purchased them because the marketing materials for the policies refer exclusively to nursing facilities. However, a review of the marketing materials demonstrates that they, like the policies themselves, are ambiguous about what they cover. (See Exs. B-G to Opp'n.) Although they reference "nursing homes" and "nursing home facilities," they also state that the plans cover "long term care," which the State of Connecticut defines to include care in managed residential facilities. See Conn. Dep't of Public Health, Statewide Healthcare Facilities and Service Plan: October 2012, at 71, available at http://www.ct.gov/dph/lib/dph/ohca/publications/2012/ohcastatewide_facilities_and_services.pdf . Ultimately, this is an issue that goes to the merits of Plaintiffs' claim, and as such, it will be left for another day.